Pat VarasHattip Calgarytrain
We haven’t closed, so anybody could still come in and make an alternate proposal. But I also like the prospect of what these fellows want to do.
—Pat Varas, president/CEO
of Western Potash
...Western now attributes much of the solution mine’s reduced capex to a new approach using directional drilling to extract the deposit selectively, eliminating the need for salt tailings.
Forecast to produce 145,600 tonnes of standard grade muriate of potash per year, the new plan’s smaller but scalable, emphasizes president/CEO Pat Varas. Should additional offtake offers come in the project could expand very considerably “utilizing the same methodology,” Varas says. “This is a first step. It’s a stepping stone. And it’s a good thing for us to do in these markets. By going into a smaller operation, a pilot project, Milestone becomes a much bigger attraction for investment.”
Eminently enviable is southern Saskatchewan’s infrastructure, Varas points out. “You can see multiple sets of power lines” from the 35,420-hectare property. “There’s roads every quarter-section. There’s major highways and two railway lines. The things you’d look for to develop a project anywhere in the world are right here.” The company also has an agreement with the city of Regina, 30 kilometres away, to supply the solution mine with treated waste water. All major permits are in place.
Once financing closes, Western estimates, development would take about two years. Varas doesn’t anticipate a feasibility study, although plans call for some further engineering. “It’s not a complicated engineering exercise,” he maintains. “It’s more about execution and keeping within budget and timelines. The way things are going in the commodities sector, I think it’s a good time because there are more people available with skills.”...
...Of course Tairui’s buy-in would dilute ownership. But Varas points to the opportunity. “We can do nothing and eventually run out of money and watch ourselves die like many other companies,” he argues. “Or we can move the project forward. This is the market we have.”
“I don’t see any other deals out there, although one could come soon. We haven’t closed, so anybody could still come in and make an alternate proposal. But I also like the prospect of what these fellows want to do. They’re market people, not miners or fertilizer people. They look at the markets, see an opportunity and invest. And I think their vision is to take this company and dual-list it in Hong Kong. I think that could offer a tremendous amount of potential to boost value for our shareholders.”
He says other parties showed interest prior to last month’s Tairui agreement, which was signed within days of the revised PEA’s release. Not to be ruled out is the possibility of an alternative transaction or additional offtake without an ownership position. “Until the money’s in the bank, obviously, we don’t know what’s possible out there.”
As for the commodity, Varas sees continued opportunity. “I think there’s always going to be demand for potash,” he says. “The markets are very well controlled by the parties that are out there. But I think the world needs projects that can produce at low cost and I believe we can do that. What we envision as our cost to produce potash will be very competitive.”